The rally was driven by a combination of factors:

• Easing regulatory pressure on China’s tech and consumer sectors.
• Targeted government stimulus aimed at stabilizing growth and restoring investor confidence.
• Attractive valuations after several years of underperformance versus U.S. and global equities.

Despite the strong rebound, analysts note that structural challenges remain, including weak domestic demand, the property sector overhang, and geopolitical risks. Still, the 2025 performance suggests that global investors are cautiously rotating back into Chinese equities after a prolonged downturn.

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